This watchdog blog, by journalist Norman Oder, offers analysis, commentary, and reportage about the $4.9 billion project to build the Barclays Center arena and 16 high-rise buildings at a crucial site in Brooklyn. Dubbed Atlantic Yards by developer Forest City Ratner in 2003, it was rebranded Pacific Park in 2014 after the Chinese government-owned Greenland Group bought a 70% stake in 15 towers. New York State still calls it Atlantic Yards. Contact: AtlanticYardsReport[at]hotmail.com

Friday, September 21, 2007

While many Atlantic Yards watchers are anticipating the October 9 oral argument in the appeal of the dismissal of the federal eminent domain lawsuit and expecting a decision soon in the state case challenging the project environmental review, two other cases, both involving 13 renters in two buildings, are moving toward arguments in court.

One of the cases, which challenges the Empire State Development Corporation’s (ESDC) relocation offer, in fact is the only case formally blocking the agency from moving to condemn properties. “At minimum, they can’t do anything to my clients until the case is over,” said George Locker, attorney for the plaintiffs, at 624 Pacific Street and 473 Dean Street.

The state has promised to provide the services of a real estate broker, moving assistance, and a $5000 payment—but that, Locker argues, will hardly guarantee similarly affordable housing. (Of the 13 plaintiffs, 12 have rent-stabilized leases, and many pay rents that are $500-$600.)

That case, which was not heard in a trial court but will be argued directly in an appellate court, will be heard by the Appellate Division, Second Department, 45 Monroe Place, Brooklyn, on [corrected] October 5 at 10 a.m.

(Must the ESDC also wait until the eminent domain case is resolved to move forward with condemnation of properties involved in that case? Technically, no, I believe, but it’s likely the state will be cautious and wait until resolution.)

The other case involves an appeal of a lower court decision declaring residential rental tenants to be condemnees, with an ownership interest in their lease. Justice Walter Tolub in May dismissed the case, saying that the case belonged instead in the appellate court, where challenges to eminent domain determinations are supposed to be heard, but without the advantages of a trial. That appeal will be heard in the First Department, 27 Madison Avenue, Manhattan, after 2 pm on September 26.

Legal twists

Both cases involve some interesting legal issues. For example, Tolub relied on a string of cases that showed the commercial tenants threatened with condemnation had an ownership interest via their leases; no case has evaluated the situation of residential tenants. Locker maintains that, if the appellate court upholds Tolub’s decision, the state will be expanding the rights of residential renters.

Regarding the relocation offer, which involves a plan but not a promise to find tenants alternative accommodation, the ESDC has the seemingly slam-dunk argument that the court in 2001 already upheld an identical relocation offer. Locker cautions that the plaintiffs in the case represented themselves, without a lawyer, and that the decision serves as a poor precedent.

Relocation: method or results?

In the relocation case, the ESDC says that the challenge to the state’s determination and findings, under the Eminent Domain Procedure Law, is a challenge to the entire project, not merely the two buildings.

Pointing out in a legal brief that the state in 2001 upheld “an identical relocation plan,” the ESDC’s lawyers state, “It simply confounds belief that Petitioners could have failed to discover this case.”

The question posed to the court, the ESDC says, is whether the state has the statutory authority to pursue condemnation, where it has made a finding “that there is a feasible method” for relocation.

There is no legal requirement that ESDC “must actually provide comparable housing at that time to those who in the future may be displaced,” the agency says, pointing out that the housing market, as well as the circumstances of the tenants, can change rapidly.

And, says the ESDC, if the state’s relocation consultant does not provide comparable housing, the tenants can then go to court and contest the condemnation.

Locker’s response notes that the ESDC itself has not offered petitioners relocation into the project at hand, as state law states is one option. Nor has Forest City Ratner’s relocation offer to tenants—which apparently excludes those suing it—part of the record.

The developer has offered to pay the differential rent—the difference between current rent and the rent of current apartments—for other former footprint residents, though the offer expires if Atlantic Yards isn’t built and the tenants are not relocated into the project. “Most [of the plaintiffs] have never been offered anything,” Locker said. “A few were offered something years ago.”

He argues that the ESDC has not studied “the private rental housing market into which respondent plans for a real estate broker to refer the petitioners” and that no facts in the record “show whether comparable and affordable rental housing existed in the project area, or other areas no less desirable, in 2005 or 2006, or would likely exist in 2007.”

He also points out that Forest City Ratner told City Council in May 2005 that the need for condemnation was “substantially reduced” because the developer owned most of the units on the project site, thus ignoring the need for “friendly condemnations” that would extinguish the leases of tenants with rent-stabilized leases in buildings it owns.

Feasible method

The law establishing the Urban Development Corporation, now aka ESDC, requires "that there is a feasible method for the relocation of families and individuals displaced from the project area into decent, safe and sanitary dwellings, which are or will be provided in the project area or in other areas not generally less desirable in regard to public utilities and public and commercial facilities, at rents or prices within the financial means of such families or individuals, and reasonably accessible to their places of employment. Insofar as is feasible, the corporation shall offer housing accommodations to such families and individuals in residential projects of the corporation. The corporation may render to … families or other persons displaced from the project area, such assistance as it may deem necessary to enable them to relocate.(h) in the case of all projects, the corporation shall state the basis for its findings."

Does a method require “a description of its relocation plan” or simply a method? Locker’s legal brief argues that "the UDC Act requires ESDC to find that there is a feasible method for the relocation of families, not that there will be a feasible method."(Emphases here and below in original)

He continues, arguing, "ESDC may have found that it had a relocation method—use of a real estate broker, a $5000 payment, and a moving van - but this is not a factual basis for finding that these elements are capable or likely to provide petitioners with the specific components of the relocation benefits outlined in 10(g)."

And why didn’t ESDC compile a record on tenant relocation? Because it did not believe any tenants would remain, Locker contends.

“Numbers of my clients appear to have modest incomes and very low rent,” Locker said. “It appears that that kind of rental housing doesn’t exist any more.” Actually, if Atlantic Yards gets built, there would be 900 low-income units (over ten or 20 years or however long the project takes), with perhaps 225 of them studios; they would currently cost under $600 a month for single people who meet the income eligibility.

It’s possible, Locker acknowledged, that some of the tenants he represents may have low rent but less modest incomes. The ESDC response notes that it’s required to find accommodation that is affordable, but not necessarily at the same low rent guaranteed by the rent-stabilized lease.

Who’s an owner?

In case appealing Tolub’s decision, the ESDC notes that state law defines a condemnee as “the holder of any right, title, interest, lien, charge or encumbrance in real property subject to an acquisition or proposed acquisition.”

The ESDC adds that the fact that Locker filed the relocation challenge is “an indisputable acknowledgement by plaintiffs-appellants that they are condemnees.” Locker’s reply brief says no, that “[n]owhere do appellants ‘acknowledge’ they are condemnees.”

Locker cites another case in which the courts have “clearly held that under the EDPL, a Rent Stabilized, month-to-month residential rental tenant has no compensable property interest in his/her lease.” Those cases, however, do not deal with the issue of condemnation.

So the appellate court will have decide which line of cases—those involving commercial tenants facing condemnation, relied on by the ESDC and the lower court, or those cited by Locker—is more apt.